Wednesday, October 15, 2014

News: New role for Rea at Surgical Innovations

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Chris Rea, OBE, founder of Rotherham manufacturer, AESSEAL, has been appointed as the interim managing director of Surgical Innovations Group Plc (SI), the Leeds firm that specialises in the design and manufacture of creative solutions for use in minimally invasive surgery (MIS) and industrial markets.

In June, the AIM-listed firm announced that Rea had acquired an 8.9% stake in the business in a £1.6m deal that also saw the Northern Ireland born entrepreneur take a place on the board as a non-executive director.

With Doug Liversidge CBE, a former master cutler, as non-executive chairman, SI was moving into two key areas of minimally invasive surgery: the offering of a unique clinical solution for 3mm surgery and a "resposable" universal seal port access system that together support an enhancement in the group's revenues per surgical procedure.

Current managing director, Chris Rea, OBE founded AESSEAL in 1979 and he retains a majority interest and control in holding company AES Engineering Ltd. With global headquarters at Templeborough, AESSEAL is the world's fourth-largest designer and manufacturer of mechanical seals for a wide range of industries, including oil and gas, food, water, mining and pharmaceuticals. Under Rea's entrepreneurial leadership, the firm has grown sales and profits every year for over 30 years.

The board at SI recognised Chris' expertise, particularly in manufacturing, and invited him to join the board as a non-executive director. Following his appointment, the board carried out a strategic review and concluded that there should be a greater focus on cash generation, from enhanced focus on the SI Brand and controlled de-stocking of the customer supply chain, in order to establish a stronger long term business.

Last month, SI was forced to issue a profits warning as it anticipated that full year revenue and profit will be significantly below market expectations. The board said that it was due to continued reductions in OEM (original equipment manufacturer​) revenues and slower than anticipated revenues from the US dealer network, coupled with the board's strategic decision to reduce inventories within the customer supply chain.

In the following interim results announcement for the six months ended June 30 2014, SI reported a £3.182m pre-tax loss, down from a £623k profit in the same period in the previous year. The financial performance was described as disappointing and led to the group carrying out an impairment review of its OEM asset value which hit the balance sheet for £1.736m.

With demand for international OEM products consistently weakening, the board made the strategic decision to develop only OEM products that would add value to the SI brand.

SI secured £5.05m from the government's Regional Growth Fund to create a new 10,000 sq ft clinical training centre in Leeds but this is under review and may be scrapped.

Surgical Innovations website
AESSEAL website

Images: AESSEAL

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